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AQA GCSE · Question 14.2 · How markets work
Explain one business objective Paul might have.
Explain one business objective Paul might have.
How to approach this question
1. State a valid business objective (e.g., profit maximisation, survival, sales maximisation). 2. Explain what this objective means in the context of Paul's business, using data from the table if possible to support your explanation.
Full Answer
One business objective Paul might have is profit maximisation. This means he aims to make the largest possible profit, which is the difference between total revenue and total cost. Looking at the table, his profit is highest at 20 surfboards (£4000 - £3500 = £500 profit), so he might aim to produce at this level.
Businesses can have various objectives. A common one is profit maximisation, where the firm tries to achieve the biggest gap between total revenue and total costs. Another could be survival, especially for a new business, where the main goal is just to stay in business (which means at least covering costs). At 15 surfboards, Paul is breaking even (Total Revenue = Total Cost), which could be linked to a survival objective. Sales revenue maximisation would involve producing where total revenue is highest. Based on the table, revenue is still rising at 20 units, so this could also be an objective.
Common mistakes
Simply stating an objective without explaining what it means.
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